Photo: Bloomberg Businessweek
EU leaders will finalise the terms of the Spanish bank bailout, Greeks will vote (again), and investors will bite their nails over Italy.Even with such excitement already brewing just two weeks into June, the rest of the month is expected to be no less eventful.
Get ready for a whirlwind ride through EU politics and finance.
Italy will auction off medium- to long-term bonds. Investor sentiment in this bond auction will provide insight into the depth of investor concerns about stress on Italian banks in the wake of the Spanish bank bailout.
On the most highly anticipated date in Europe right now, Greeks will turn out to the polls for a second shot at politicians who can form their government. Support for the anti-bailout SYRIZA has grown despite allegations from other EU leaders--led by German Chancellor Angela Merkel--that Greece's vote will be a referendum on the euro. SYRIZA's Alexis Tsipras argues that EU leaders are bluffing, and demands that they relax austerity requirements for the struggling country.
June 17 also marks the second round of the French parliamentary elections. The first round of elections on June 10 hinted that recently elected French President Francois Hollande's Socialist Party would win the parliament, which would give them the smooth sailing to pass potentially controversial policies. If not, the parliament could face difficult in rapidly passing contentious proposals related to the euro crisis.
Only candidates that did not receive a clear majority of the votes in their district will proceed to this second round.
G20 leaders will meet in Los Cabos, Mexico, for their seventh meeting, and threats to global growth stemming primarily from Europe are likely to be at the top of their agenda.
We are likely to hear more rumours about aid from international countries for the region. Otherwise, the issues EU leaders will talk about will likely depend on the progress of a Spanish bank bailout plan and the
European finance ministers and Jean-Claude Juncker--the Eurogroup--will meet in Luxembourg to discuss the terms of the Spanish bailout and the fallout of the Greek elections. This meeting will set the tone for a summit of EU leaders later in the month.
Finance ministers from all 27 European Union countries will meet in Luxembourg, a follow-up to a meeting of euro area finance ministers the day before.
Spain will issue long-term debt--or 'obligaciones'--in the midst of discussions about its bank bailout plan. The auction will serve as an important indicator of the depth of concern about the Spanish government in the wake of the bailout plan. If yields rise significantly or the auction fails, it mark an end to Spain's ability to access the markets for funding. A mediocre or good auction would bring investors a sigh of relief.
Italian PM Mario Monti, French President Francois Hollande, German Chancellor Angela Merkel, and Spanish PM Mariano Rajoy will meet in Rome ahead of an EU summit the following weekend. Their talks will foreshadow the issues that will be discussed and the compromises that will be made.
The Spanish bank bailout and fallout from the Greek elections are likely to be the two most pressing problems they'll address, but we could also hear the first details about fiscal integration.
EU leaders will gather in Brussels in their latest summit, with the stated aim of fostering fiscal integration within the euro area. This discussion will likely produce clashes between the austere German leadership and the more pragmatic Monti, Rajoy, and Hollande. While we could see the faint outline of an integration plan come nearer--a European Redemption Fund looks the most promising--without a severe increase in market pressure between now and the summit, we're unlikely to see any swift or groundbreaking changes.